National Accounting

What it is:

National accounting, also called macro accounting, is a method of calculating the economic activity of a country or region.

How it works (Example):

In the United States, federal government agencies typically use national accounting to calculate employment rates, inflation rates and many other statistics that indicate how the country's economy is faring. These agencies include but are not limited to the Bureau of Economic Research, the Department of Labor, the Department of Commerce and the Department of the Treasury.

Why it Matters:

The goal of national accounting is to summarize the whole economic picture. Accordingly, the markets watch this information closely because it often signals the overall direction of an economy and thus can provide buy and sell signals for a variety of industries or portfolio strategies.

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